Italian Eni complies with Moscow’s demands to pay for Russian gas – 05/17/2022 at 22:47

The Italian energy giant Eni announced on Tuesday its intention to open an account in euros and another in rubles with Gazprombank in order to honor its payments for the supply of Russian gas due « in the coming days », thus complying with the demands of Moscow.

« The payment obligation can be fulfilled by the transfer of euros » and the new procedure « should not be incompatible with the existing sanctions » against Moscow imposed by the European Commission, assures Eni in a press release.

The Italian group, 30.3% controlled by the State, thus seems to be taking the opposite view of the recommendations of the European Commission, according to which the opening of an account in rubles would constitute a violation of sanctions and would lead to infringement proceedings. from Brussels.

« Anything that goes beyond the guidelines » given by the Commission to member states « would contravene the sanctions », its spokesman Eric Mamer had declared a few hours before Eni’s announcement.

These indications consist of « opening an account in the currencies provided for in the contract, making a payment in this currency and making a declaration saying that this closes the payment for the gas delivery concerned », he specified.

Shortly after, Finland, a candidate for entry into NATO, indicated that it feared a cut in Russian gas because of its refusal to pay Gazprom in roubles, like Poland and Bulgaria.

– Without the Russian central bank –

According to Eni, the Russian authorities have confirmed that « invoicing and payment will continue to take place in euros » – the currency agreed by the contracts -, and « an operator of the Moscow Stock Exchange will carry out the conversion into rubles within 48 hours without the intervention of the Central Bank of Russia ».

A Kremlin decree introduced a new payment procedure in two phases, with first a deposit into a Gazprombank account in euros or dollars, then the conversion into rubles on a second account opened with the same establishment.

Initially, this conversion mechanism involved a transaction with the Russian central bank, which the EU sanctions regime prohibits.

« As requested by the European Commission, the Italian group has clarified » to Gazprom « that the payment obligations will be considered satisfied by Eni with the transfer of euros », indicates the group.

While Brussels has ruled on several occasions that such a ruble conversion mechanism represented a circumvention of EU sanctions, member states anxious to maintain their supplies such as Germany and Italy have requested clarifications in writing.

« It is the Member States which are in charge of compliance with the sanctions, it is up to the national authorities to ensure that companies comply with the obligations under the sanctions » adopted by the Commission, argued his spokesperson.

– Avoid disruption of deliveries –

Eni’s decision « was shared with the Italian institutions », underlines the group, before adding that it was a question of avoiding « a potential rupture of the supply » of gas.

Italian Prime Minister Mario Draghi said he was « quite confident » last Wednesday that Italy could pay for Russian gas in May without violating sanctions.

« There is no official statement that the payments violate sanctions, so it’s a gray area, » he told reporters in Washington.

Italy is very dependent on Russian gas as it imports 95% of the gas it consumes, of which around 40% came from Russia in 2021.

Also very dependent on Russian gas, Germany claims to want to comply with EU recommendations, but remained unclear about the possible opening of accounts in rubles in the name of German companies at Gazprombank.

« Companies will pay their next bills in euros, » German Economy Minister Robert Habeck said on Monday, without specifying whether accounts in rubles could be opened. The mechanism will in any case be « in accordance with the sanctions », according to Mr. Habeck.